Who is your lighthouse keeper?

Having a financial plan is imperative not because our lives are ordered, structured and predictable, but because they are not. The truth of that statement, sometimes elusive during periods of plenty, has never been more evident than in recent months.

The fact is that unpredictable, life-altering events tend to shatter our sense of complacency and remind us of the importance of having someone at our shoulders to help manage our financial anxieties at times of great external stress.

This is why a sound financial plan is not a once-off document that you have drawn up at a certain period in your life, file away at the back of a drawer and forget about. To be effective, a plan needs to evolve with your life, your circumstances and your changing goals.

Neither should a financial plan be a cookie-cutter solution that applies to everybody. The fact is we are all different. There is infinite variety in our individual values and priorities, risk appetites, investment horizons, family circumstances, working patterns and living arrangements.

A financial plan should not just be an investment plan either. Of course, that is part of the design, but only a small one. The investment portfolio is really just the means to the end, which is living the life you want to live and giving you the flexibility you need.

A roadmap is not an effective metaphor. That implies there is only one route to where you want to go. An effective financial plan recognises that life is about trade-offs. It presents you with alternative routes, each with their own advantages and disadvantages. You decide ultimately.

Good financial planners will give you a sense of what you can and can’t control and give you the means to make relevant choices along the way. The plan will start with your goal and work back from there, taking account of such issues as cash flow, savings, debt, the costs of education, rearing a family, taking care of ageing parents, changing careers, etc;

In contrast, if the plan starts with a product rather than with the individual, it will inevitably be a bad plan. That’s because the process in the former case is more about sales than advice. The client, their life and their circumstances have to be at the centre.

So, in conclusion, a financial plan should be a living, breathing document for each person. A good financial planner will understand that, providing you with constant communication about your course to your goals, guidance, reassurance and, most of all, accountability.

Look at it this way. Yes, you can sail your own ship. But you still need a lighthouse keeper, alerting you to dangerous coastlines, shifting shoals and treacherous reefs, guiding you safely into your desired harbour and keeping all aboard safe and secure.

That’s why you need a financial planner.